📉 The Financial Chill

Thursday 6th June 2024

Housing Starts Fall 56% from Peak—The Rate Hike Recession Hits London Hard

The full force of the Bank of England's rate hikes (Headline 6 from our previous analysis) hit London hard. Government figures released in late 2024 showed that new build dwelling starts in England had fallen 56% from their June 2023 peak, with London experiencing a sharper drop in commencements than the rest of the country.

In North London, this meant large-scale apartment schemes were either shelved or scaled back as development finance became cripplingly expensive. For us, this meant the overall supply of new homes slowed drastically, but it also softened the competition for some of the general subcontractors, slightly easing the wage pressure we felt in late 2022. The crisis shifted from "Can we afford the materials?" to "Can the client afford the borrowing?"

Robbins Construction Ltd Opinion: This volatility is destructive. We need stability. While rates are easing now, the impact of the rapid hikes on client confidence and the Total Cost of capital means developers and homeowners are still hesitant. Predictability is the key to unlocking the construction pipeline, not just low rates.